Hurricane Ike Spikes Gasoline Prices as Oil Prices Fall

Astronauts took this photo of Hurricane Ike from the International Space Station on September 9, when the storm was over Cuba. Enlarge this image.Credit: NASA

Hurricane Ike brought a massive storm surge to Galveston, Texas, and
surrounding communities on September 13, and although the toll in
property damage, injuries, and deaths remains unknown, federal
agencies are already getting a grasp on the impacts to oil and gas
infrastructure in the Gulf of Mexico and along the Texas coast.
According to the Minerals Management Service (MMS), 28 of the 3,800
offshore oil and gas production platforms were destroyed by Hurricane
Ike, and several other platforms are significantly damaged. Most of
the destroyed platforms were old and small, and the MMS estimates the
damage impacts at about 11,000 barrels per day of oil production and
82 million cubic feet of natural gas production, or about 1% of Gulf
oil and natural gas production. As of September 16, 97.2% of oil production
in the Gulf was shut-in, along with 84.2% of the natural gas
production, and those numbers are already up from the statistics for September 15. Personnel are still evacuated from 69.5% of the manned oil and gas
production platforms in the Gulf. See the latest MMS press releases.

DOE's Office of Electricity Delivery and Energy Reliability is issuing
status reports on the energy impact of Hurricane Ike, and as of
September 16, 2.2 million customers in Texas lacked power, as well
as another 1.7 million customers in seven other states. Fourteen
refineries in Texas and Louisiana are shut down, with a total capacity
of 3.6 million barrels per day of petroleum products, or about 20% of
U.S. capacity. According to the status report, damage to the
refineries is minimal, but many are lacking electrical power. Many oil
and natural gas pipelines were shut down during the hurricane and are
only starting to recover from the event. To help ease the impact of
the supply disruptions, the U.S. Environmental Protection Agency (EPA)
has issued emergency waivers of certain fuel standards for 10 southern
states and Ohio, which was also impacted by the storm. DOE released
380,000 barrels of oil from the Strategic Petroleum Reserve (SPR) on
September 11 to address the continuing impact from Hurricane Gustav,
and released another 798,000 barrels of oil on September 14-16 to
address the impacts of both storms. See the DOE status reports, the
EPA fuel waivers, the latest DOE press releases, and the White House fact sheet on the federal response.

Despite the short-term impacts of Hurricane Ike on oil production, oil
prices have continued to decline, according to DOE's Energy
Information Administration (EIA). But the combined impact of Hurricane
Gustav and Hurricane Ike has driven up gasoline prices, causing an
increase in average unleaded gasoline prices of 18.7 cents per gallon
from September 8 to September 15, according to the EIA, including
price hikes of 34 cents per gallon in the Lower Atlantic region. The
American Automobile Association's Fuel Gauge Report shows another
12-cent rise on September 16. The EIA estimated on September 16 that at least
14 million barrels of gasoline and 10 million barrels of diesel fuel
have not been produced because of the storm impacts. With the
increased fuel prices, the Federal Trade Commission (FTC) is working
with DOE to prevent price gouging or price fixing, and DOE is
accepting complaints through its Gas Price Watch Hotline. See the latest
EIA reports on
energy market impacts of the hurricanes and on
gasoline and diesel fuel prices, the latest
Fuel Gauge Report, the
FTC press release, and the DOE Gas Price Watch Hotline.